Income & Expenses – October 2014

One of the main reasons I started a Blog was to publicly record all of my Income and Expenses each month. 

There were two main reasons why I decided to do this:

  1. Accountability – Just knowing that I’m going to be writing down all the pounds and pennies that I spend each day is reason enough not to go crazy with my spending. It also encourages me to invest as much money as I can to boost my monthly saving rate. The act of writing everything down will motivate me to spend less and save more. I have a Goal of saving more than 50% of my monthly wage every month and spending less than £950 per month for the rest of 2014.
  2. Evidence – I want to prove that anyone can become financially independent, including someone like me on an average salary (under £30,000 pa). You’ll be able to see what I spend every little penny on, each month. You’ll also see what I earn and what percentage of that I’m able to invest with. I want this Blog to represent a real-time document of how someone can go from earning less than £10 in one year (2013) in dividend income, to earning enough passive income to cover all monthly expenses and spending (2022).

Income

I will rarely have the same wage each month as I have a commission based job. I might also be eligible for bonuses at certain times of the year, which will impact on the total of my wage. My wage figure will be the net sum I’m paid after tax, national insurance, company pension, salary sacrifice for pension, and student loan. I will only include one figure for my wage but I will mention if my commission is high/low and I will also let you know if I’ve triggered a performance based bonus. 


Expenses

The first two expenses are fixed amounts. ‘Mortgage/House Bills’ is an account where Miss FFBF and I pay into each month (£470 each) to cover mortgage payments, council tax, water, TV licence, telephone, electricity, and broadband. ‘Food Account’ is another joint account we use to contribute a fixed amount (£50 per month) for food shopping. 
Here’s a breakdown of my Income and Expenses for the previous month:


Income from October 
Wage £1,447.90
Dividends £19.88
Ebay £42.26
Interest from Savings £2.39
Pearsons Sale – Profit £209.48
Index Fund Sale – Profits £259.90
Funding Circle £21.30
Birthday Money £62.16
Total Income £2,065.27




Expenses from October 
Mortgage/House Bills £470.00
Food Account £50.00
Mobile £8.22
Petrol £10.00
Birthdays £1.00
Groceries £28.21
Alcohol £26.29
Coffee £4.80
Eating Out £30.69
Fast Food £9.00
Powerlifting Singlet £53.98
Gift at work £1.00
Clothing £25.00
Trainers £44.98
Books £11.53
Wedding Accommodation £35.00
Public Transport £3.50
Charity £2.00
Total Expenses £815.20



Income

October’s wage was predictably low for me. It was actually my lowest wage of the year so far. My overall Income for the month ended up being very healthy, so lets look into each section in a bit more detail.

My Dividends were lower than average (as I expected them to be). It’s a large improvement on 2013, where I didn’t receive any!

I sold a pair of trainers and a DVD on Ebay for a nice profit. After charges and post and packaging I was left with just over £40.

The interest from my savings has continued to fall as I take more money from the pot to invest with in the stock market instead. I’m unlikely to take any more cash out now as I have enough to cover my expenses for 2-3 months, and I’d like to keep it there in case I need to call upon it.

I’ve had a fantastic month for profits by trading. By selling shares I held in Pearsons and three different tracker funds I made £469.38 after commission and charges. 

My Peer to Peer lending account – Funding Circle passed it’s threshold of £20, so I took more money out of the account to invest with. 

To cap off the months income I had just over £60 in birthday money (5th November) from my ‘mother-in-law to be’. She’s so sweet, and she does it every year, bless her.

The combination of all of the above has meant that my lowest month’s wage has been part of an above average income month overall. Perhaps there’s something to be said for ‘side-hustles’ after all.   
Expenses

The first five lines on expenses were pretty standard from Mortgage/House Bills to Birthdays. 

My groceries were around slightly above average (I think). At the end of the year, I’m going to spend some time adding up all of these sections and calculating what ‘average’ means to each one. Groceries seem to fluctuate month to month so it’ll be interesting to see what the end of year average will be here.

Alcohol most certainly increased in October. My office has a large ratio of women (and there’s nothing wrong with that!), over the last 8-10 months we had a few guys join and it’s nice to spread the ratio out a little bit. We decided to celebrate the higher than normal male percentage and have a night out in our local town. We had a fantastic time, and we plan to repeat it on a monthly basis due to the fun that was had. I don’t do enough of this sort of thing nowadays, and it was a great reminder of how important socialising is to my well-being. This is money well spent in my view. 

My Coffee spend was fairly stable. Miss FFBF and I went out for one coffee lunch. We’re likely to do this 1-2 times a month on average.

My ‘eating out’ and ‘fast food’ shot up this month. This was primarily down to buying a meal for another couple we went out. They’ve hosted us for a few meals over the course of this year, and they’ve not been able to make it over to our house – This is mainly due to them looking after their pets. When we went over their house we insisted on buying them a meal as we weren’t comfortable in continually being fed by them.

I bought my powerlifting singlet for the competition in the month. This was a good quality ‘entry level’ suit. I plan on using it in the future, and I was pleasantly pleased with the performance of it.
I was really pleased with my clothing purchases this month. We have a shop in our town that I don’t use a lot, but I’m a big fan of. It sells fashionable clothing from companies like Paul Smith, Ralph Lauren Polo and Armani but they’re all second hand. It’s similar to TK Maxx or a charity shop but it only sells ‘high-end’ brand names. I’ve been looking for a new/used pair of jeans on Ebay for a few weeks now, and I came across a lovely pair of Paul Smith Jeans that fit me perfectly for £15. Originally these jeans would have been north of £70 brand new. I also purchased a nice Jack Wills Rugby shirt for £10. I’ve only seen a couple of these shops before in the UK, I’m sure there’s more. I’m a big advocate of buying quality clothes at a low price! I finished off my clothing purchases with some trainers from Ebay which set me back £45.

I don’t own a kindle and I was running out of books to read, so I decided to buy a couple that have been on my wish list. The first was ‘The New Buffettology’ – which is an insight into the investing strategy Warren Buffett uses. Its focus us on value investing. My second book was ‘How to be a productivity ninja’ – The book uses techniques including Ruthlessness, Mindfulness, Zen-like Calm and Stealth & Camouflage you will get your inbox down to zero, make the most of your attention, beat procrastination and learn to work smarter, not harder. I’ve started reading Buffettology and I’ve been very impressed so far. 

A childhood friend of mine is getting married in December, and Miss FFBF and I decided to stop overnight. The accommodation was fairly cheap and we can REALLY enjoy the evening then!

My expenses were wrapped up with a small public transport expense and a charitable donation. 


Expense Goal

I have a goal for 2014 which is to keep my expenses below £950 per month, averaged out over the year. Here are my total expenses to date:


Month Expenses
March £856.36
April £922.86
May £966.20
June £585.54
July £833.15
August £859.99
September £766.17
October £815.20
November
December
Total £6,605.47
Average £825.68


My average spend at the end of September was £827.18. It’s now dropped by £1.50 to £825.68. I’m still well below my goal of keeping expenses under £950 per month. I’ve previously mentioned that I would like to keep my expenses below £800 per month for 2014. I think this is just out of reach now. In order to achieve this, I would need to keep November and December’s spending below £697 each month. It’s not impossible, but I’ve only achieved that once this year, and doing it for the next two months is unlikely, especially with Christmas approaching. £800 might be more achievable for 2015. 

Savings Rate

I have a goal to save/invest at least 50% of my income every month for the remainder of 2014. 

I saved and invested 65.3% (£1,348.02) of my income this month. My average for the year has now decreased to 70.2%. I would like to keep my saving rate around the 75% mark for 2014. This is also looking less likely now, as I would need to save 94% of my income for the next two months! 

Thank you all again for supporting me and for taking the time to read about my month. 

How was October for you? Are you still on track to meet your goals this year? What have you learned or improved on?

0 Comments

  • Anonymous

    Reply Reply 11th November 2014

    Huw

    Congratulations on achieving such a fantastic monthly saving rate.

    I agree with you regarding the socialising aspect. Feeling good about yourself and been happy are very important and make everything that much easier.

    Richard

  • weenie

    Reply Reply 11th November 2014

    Hi Huw

    Happy belated birthday on 5th of November (an easy one to remember for next year!) – hope you had a great day!

    Congrats on an awesome savings rate – I know it means your average has dropped but it's an unbelievable rate anyway! And well done on keeping your expenses well below your goal, that's despite you being able to make purchases, go out etc!

    Ah the male bonding thing! 🙂 I for one think it's good to socialise with people from work – you spend so much time with them at work that it's nice to be able to spend time with them outside of work and get to know them better. So I go out with 'the girls' usually once a month and they're always great nights out!

    I see that you are withdrawing funds from Funding Circle and investing them elsewhere? I'm still reinvesting my P2P funds, don't mind letting that build up although I'm not thinking of adding to the funds right now.

  • Huw Davies

    Reply Reply 12th November 2014

    Hi Richard,

    Thank you for the kind words.

    I've had a fantastic year for reducing expenses. I would say the vast majority of it as been relatively comfortable for me. The one aspect I have missed is socialising. I plan on implementing more consistent socialising time next year, and I might place a Goal around it too. It is an additional expense, but it offers so much, and I believe you can socialise for minimal outlay if you want to.

    All the best!
    Huw

  • Huw Davies

    Reply Reply 12th November 2014

    Hi Weenie,

    Thank you so much. How did you remember that?!

    I had a great day thank you. My nephew was born on the same day, so I went over to my sisters house for a joint 1 and 32 year birthday celebration with the family. I took it very steady though, as I had an operation the following day. I had my gall bladder removed, and I'm currently recovering at home. I'm on the mend and getting stronger each day.

    I wasn't too displeased with the saving %, even though it dropped slightly. I had a lot going on in October! The 'lads night' was fantastic. You're absolutely right Weenie, we spend so much time with people at work, it's great to spend some time REALLY getting to know them outside of work too. As I mentioned to Richard above, I would like to do it more often, and I don't think it has to cost the earth. Once a month seems realistic too. It shouldn't involve massive spending and you have something to look forward to every month. I plan on making a socialing goal for 2015. It might seem a bit odd to some, but I know when I write something down and commit to it, I'll do everything I can to achieve it.

    Yes I take money from Funding Circle and use it to invest in the stock market. I'm still committed to saving £300 a month to First Directs Regular Saver (5%) until January, and that sum means I'm sometimes short of the £1,200 minimum I use to invest with. I take all the £20 and £50 I can put put towards those purchases. The payments stop in January so I'm looking forward to having that surplus in my account each month. P2P investing is one of the options I could go with. I might decide to invest in my 'non-NISA' account too…..I'm not sure just yet.

    Thank you again for the birthday wishes!

    Huw

  • weenie

    Reply Reply 12th November 2014

    Ouch, wishing you a speedy recovery after your operation!

    The FD Regular Saver is 6% and I'm paying in the max £300 too. If the interest rate stays about the same in January, I think I'll start it up again. A bit like you, I'm not sure just yet either!

  • Dividend Mantra

    Reply Reply 12th November 2014

    Huw,

    Happy (belated) birthday!

    Congrats on the consistently high savings rate. That's really impressive. I'm glad that not only are you saving a good portion of your income so as to invest, but you haven't really suffered much in the process. You're even having more fun and still saved well over 60% of your net income. I think you'll find your groove over the long haul and keep right on trucking.

    Best wishes!

  • Huw Davies

    Reply Reply 12th November 2014

    Thank you Weenie, I appreciate that!

    Sorry I should have been more specific and said 5% after tax. It's not a bad return is it! I'll give it some thought in January like you but I think I'll opt to free my money up for directly invest with.

  • Huw Davies

    Reply Reply 12th November 2014

    Thank you DM!

    Yes, I've had a cracking year all around, and I'm delighted with where I'm at so far. I think you're right that I'll eventually find a balance of what I spend and save on fun times and investments. I'm also comfortable with changing my strategy to suit my future needs. As long as I'm saving over 50% of my wage as a minimum I'll be happy with that!

    Thanks for stopping by.
    Huw

  • Tawcan

    Reply Reply 14th November 2014

    Happy belated birthday. It's awesome that you've been able to achieve high saving rate consistently. Keep it up!

  • Huw Davies

    Reply Reply 14th November 2014

    Thank you for the birthday wishes and the kind words on my saving rate. I hope you had a good trip back from Germany. All the best!

    Huw

  • Starla

    Reply Reply 16th November 2014

    Hi Huw, nice work on the £825 all in spend for Oct, and the 65% savings rate. I've never been sure on how to calculate my savings rate, there doesn't seem to be an "FI Industry Standard" as yet! I was over at Firestarters blog and he went into great detail on the post "Calculating Your Savings Rate Debunked", so I adopted that method (any excuse for a new spreadsheet). For October I can report;

    Total net savings – £1789 (this is pension, company pension contribution, company sharesave and sharematch, other pre/post tax cash savings).
    Total expenditure – £1026 (this is house, bills account divided by 12, car costs divided by 12, mobile, food, going out, stuff, the lot). SV Rate = 63.5% (I think)

    I don't add in any interest from savings or dividends, I just tot that up annually as part of my net worth, which should raise the savings rate. I can see you do it differently, so it's whatever works individually.

    Clothing – I'm with you all the way. Aiming for FI does not mean dressing badly or constantly replacing rubbish gear. I always go for high end quality clothes and accessories. Also, always second hand. I don't care about labels in a flashy show-off way, but I do care about quality that lasts, fits well, but the best bit, can be bought from Ebay for cheaper than a trip to any low end high street shop. High end wardrobe, low cost = winner. We definitely need people who spend obscene amounts of money on clothes etc, with no concept of FI, to keep us kitted out – it's almost symbiotic 🙂

    Gym Gear – Great investment. I ditched my *gulp* £85 a month gym, and have kit at home, go outside for a run. That's *another gulp* over 9k saved over the next 9 years.

    You've written a lot of other interesting stuff here.

    Good read. Great work!

  • Huw Davies

    Reply Reply 17th November 2014

    Hi Starla,

    I hope you're well! Thank you for the kind words.

    Saving Rates can get a little mixed across the FI/PF Blogs. That's why I think it's important to track what's meaningful to you. For me, I want to know everything that comes in for income – Salary, dividends, ebay, birthdays etc, and rate that against what I save/invest each month – bills account, individual shares (like Admiral), cash savings, broker account etc. You've correctly identified that I differ from most by counting the interest from my cash account and dividends as savings. I chose to do this so I know exactly what I earn every month and every year. In the future months, I might make a decision to spend the dividends on Bills (unlikely, but possible). As I can be quite 'anal' with counting numbers, I decided to count those figures so I can see where the spending money has come from.
    Really, the savings rate I adopt is selfishly for me and few others. People like to compare, and I suppose I've made that a little difficult, but I'm tracking a set of figures that are important to me. At the end of next month, I'm going to have a very clear picture on everything I've earned and spent. I'm actually excited to see how it all stacks up.
    Equally, I don't include my company pension to savings as I don't see the cash. I can't touch it for another 23 years as well, so I'm kind of forgetting about it for now. As of 2015, I will be including it in my Net worth though.
    That's why I think it's important to track what YOU as an individual want to see.

    It looks like you had a very low spending month, and a very substantial savings rate, well done! I know first hand how difficult it can be to keep these numbers high on a consistent basis. Sacrifices are made to ensure that the saving rate stays above 50%. Great effort!

    It's refreshing to see someone that shares my ethos on clothing. I have to say that I don't come across many! People I come across either don't care about quality clothing and like cheap things or they they like quality clothing and they'll spend hundreds on getting it. Why can't you have both! Ebay is a gem too.

    Awesome effort on the gym. That was a high membership fee, but I'm based in Herefordshire so everything's low around here, including wages. A £1020 a year saving is fantastic, well done. This is the type of sacrifice I mean. I'm sure your gym was lovely and there's part of not going that you miss. It'll all be worth it in the long run!

    Thanks again for taking the time to read and for showing support, it means a lot. All the very best Starla!

    Huw

  • Fabiooltje:

    Reply Reply 29th November 2014

    I'm not sure whether you should count your capital gains from your investments as income; at least not when you're counting them twice when calculating when you can be a millionaire: you seem to count them as part of your income, and then you also count them again when you state your investments will grow by xx% per year.

  • Huw Davies

    Reply Reply 29th November 2014

    Hi Fabiooltje,

    I'm not sure which post your referring to here. In this post (Income & Expenses), I count capital gains from the sale of an individual company and my Index fund as income. I do this because it's money that's now in my possession that I have earned on top of my initial investment. In my opinion it is income and nothing else.

    If you're referring to the post I did on becoming a millionaire, I've used an investment return of 5% and 7%. I haven't stipulated how this money is returned, whether it's capital gains from a sale or income. My intention behind the tables were to display how achievable becoming a millionaire can be. I fully accept them not reflecting real life as they don't consider broker fees, commission, or inflation.

    If I'm reinvesting the income from the investments back into the portfolio they will help increase the growth of the total pot. So they will be counted twice – As income, and then the reinvestment of more shares, which will in turn earn more income.

    Thanks for stopping by
    Huw

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